- Institutional Demand for Bitcoin Continues to Decline:

Institutional demand continued to decline this week. Data from SoSoValue indicates that Bitcoin spot ETF funds experienced outflows of $175.29 million on Wednesday, marking the fifth consecutive day of withdrawals since December 18. If these outflows persist and intensify, Bitcoin's price could see further correction.

Daily chart of net spot Bitcoin flows into ETFs. Source: SoSoValue

- The Calm Before the Storm:
Data from Deribit shows that Bitcoin options contracts worth $23.47 billion are set to expire on Friday. Bitcoin derivatives traders are heavily focused on high strike prices, with open interest in call options significantly exceeding that of put options, as evidenced by the put-to-call ratio dropping to 0.35, indicating a generally bullish sentiment.

Additionally, the maximum pain price of $95,000 suggests that option sellers will benefit more if Bitcoin's price gravitates toward this level by expiration, as most contracts will expire worthless at this level.

This week, QCP Capital's report highlighted that despite a decrease in leveraged positions, market contraction means that downside and upside risks remain elevated.

QCP Capital analyst said: "Historically, Bitcoin tends to experience 5 to 7% volatility during the Christmas period, a pattern often associated with year-end options expiration rather than new fundamental catalysts."